The recent takedown in the price of gold has created huge demand for physical bullion worldwide. India’s wholesale buyers are only receiving a tenth of the gold imports that they have ordered.
According to The Economic Times India article:
Haresh Soni, chairman of the All India Gem and Jewellery Trade Federation, said banks and trading houses importing gold are getting only 10 per cent of their orders as the demand has surged sharply after a sudden slide in gold prices last month. “If they place order for one tonne, for instance, then they are getting only around 100 kg,” Soni said. “Consumers are buying in advance for family weddings scheduled in winter.” Buyers have been swarming to jewellers since last month as gold prices fell 11.5 per cent in a week, from over Rs 29,000 per 10 gm on April 10 to Rs 25,680 on April 17. Since then, the prices have partially recovered to about Rs 27,500 this week.
Furthermore, many Indian jewellers are expecting gold sales of 30-50% higher during the Akshaya Tritiay holiday (May 13th) compared to last year due to the lower price of gold.
“People are buying jewellery of all kinds and there is good demand for coins too,” said Rajesh Mehta, chairman of Bangalore-based jeweller Rajesh Exports, which has 80 retail outlets across Karnataka under the brand name Shubh Jewellers. He expects a 30 per cent jump in demand for Akshaya Tritiya.
With this sort of demand, the price of gold will not remain this low for long.
(photo above: soure Reuters)